Last Friday’s employment report revealed little sign of a lift off of the employment to population ratio. It’s the same as it was in May of last year—58.6 percent. Employment grew by about 1 percent (or 1.6 million) over the past year. But the working age population also grew at about 1 percent (or 2.4 million), so the ratio of employment to population stayed the same. For the policy book I edited with Lee Ohanian and Ian Wright last year we put the employment to population ratio on the cover. Here’s the sad extrapolation.

The main reason why this measure of employment has not shown improvement while the unemployment rate has declined over the past year is that the labor force participation rate has declined (from 63.8 to 63.4). Some argue that the declining labor force participation is what one would expect from the demographic changes as the baby boom generation retires. But the labor force dropout rate is much larger than that and must have to do with the prolonged slow recovery.

A simple way to show this is to look at what BLS was projecting—using demographic factors—for labor force participation before the recession and the slow recovery. The fascinating chart below is from a recent paper Chris Erceg and Andrew Levin. It shows that the decline in labor force participation rate is far greater than the demographics would suggest.

Finally, here is an updated version of the chart I have used throughout the recovery to show changes in the employment-population ratio compared with the 1980s recovery.